Rights Of A Shareholder

posted by Sandra Olojede

October 13, 2017

Many people acquire shares in different companies and are unaware of the rights a shareholder possesses and how they can be activated. The Companies and Allied Matters Act (CAMA) has highlighted the rights of shareholders as follows;

1. Dividends:

As a shareholder you are an investor in the company, and therefore entitled to dividends and declared profits, and sue for the enforcement of the right Section 385 CAMA, and other residual profits of the company.

2. Votes:

Every shareholder is entitled to vote and speak on any resolution presented at any meeting, whether in person or by proxy (another person authorized by you) Section 81 CAMA.

3. Attend Meetings:

Every shareholder is a member of the company Section 79 CAMA, and therefore must be served with a notice of general meeting (this includes Annual General Meeting, Extra Ordinary General Meeting, and Class Meeting), failure of which such a meeting could be declared invalid Section 81 CAMA.

4. Request for Information:

A shareholder has the right to request for any information regarding the company, ranging from the appointment of a director Section 256 CAMA, transfer or allocation of shares Section 124, change of name, increase or decrease in share capital to winding up.

5. Memorandum and Articles of Association:

Every shareholder has the right to request for a copy of the Memorandum and Articles of Association (MEMART) of the company Section 42 CAMA. The MEMART is the constitution of the company, that spells out the objectives, powers of directors, mode of allot and transfer of shares, meetings and quorum, amongst others.

6. Preference Shares:

There are different classes of shares (ordinary, preference and deferred shares) Section 119 CAMA. Each class of shares has its merits and demerits, therefore it is always advisable to know the type of shares and the benefits that accrue to them.

7. Transfer/Transmission/Allotment of Shares:

Shares can be either be transferred (from one person to another), transmitted (inherited after demise of a shareholder), or allotted (un-alloted shares being granted to a person). As a shareholder you have the right to transfer your shares (subject to the MEMART conditions).

These are some of the rights of a shareholder that can be exercised if you have shares or intend acquire shares as an investment. Get acquainted with your rights as an investor and member of the company, before pouring your funds into any company. For more enquires, ask a question on lawstrive.


About LawStrive

LawStrive is an on-demand lawyer hiring platform that also provides opportunities for citizens to get free advice and education on legal related matters. Ask your questions from lawyers today, Register with us.

Follow us on Facebook and Twitter